Taxation

Alaska’s taxation is NOT equitable. The 2006 Cruise Ship Initiative specifically targeted one segment of one single industry, and burdened it with taxes that were not required from any other industry.

Only visitors to Alaska who arrive on cruise ships are taxed. Further, only visitors who choose to travel to Alaska on overnight cruises on ships larger than 250 passengers have to pay the tax.

If a tourist comes to Alaska in an RV or by air, they do not pay the tax. If they choose to come to Alaska on the Alaska Marine Highway, whose ships are all smaller than 250 passenger berths, they do not have to pay the tax.

If the tax were a “visitor tax” as is levied in some countries, the tax would be across the board and equitable. Every person who comes into Alaska, no matter how they arrive or depart, would be required to pay the same tax. But passengers on cruise ships are singled out by this tax, and specifically charged for being in Alaska on an overnight cruise aboard a cruise ship that is larger than 250 berths.

The only overnight cruise ships smaller than 250 berths are some half-dozen US-flagged vessels that operate in the waters of the Inside Passage. Thus, the legislation enabling the tax was specifically aimed at the majority of the Alaska cruise fleet, some 25 larger ships that are internationally flagged, and that operate on primarily 7 to 10 day cruise itineraries in and out of Alaskan waters.

And while the US-flagged “small ship” fleet carried perhaps 8,000 passengers in 2008, the vast majority of cruise visitors to Alaska sailed on the “large” ships, with some 1 million passengers being charged the Alaska cruise ship “head tax” for choosing these vessels for their vacation.

Taxes and regulation impact every Alaskan. Unfortunately, the proponents of the Cruise Ship Initiative were able to convince the average Alaskan that this was a tax on someone from out of state, and not on them. The cruise passenger from Ohio would pay the tax, and not Alaskans.

However, with the loss of three big ships from Alaska, redeployed for 2010, and the loss of their 140,000 passengers who will now not be coming to Alaska to spend money, Alaskans will be hit with higher prices for goods and services. Many of the goods and services that Alaskans enjoy in the winter are provided by businesses that are able to offer them in winter only because they are subsidized with revenues from the cruise ship visitors who come in the summer. One result of this will be that with less summer passenger volume, air service to cities like Anchorage will be cut back, and without the higher volume of cruise passengers helping pay for the seats, the prices for air tickets will go up for Alaskans. This would not have occurred if targeted anti-business regulations had not helped drive the cruise lines from Alaskan waters to deploy ships in other parts of the world.

The tax is completely inequitable, and targets one specific part of one single industry. It drives up the cost of doing business in Alaska, and makes Alaska uncompetitive with other global cruise destinations.